case study

Realigning Operations to Enable a Pharmaceutical Company’s Growth

Opportunity | A $9 billion pharmaceutical company’s major investment in improving distribution operations wasn’t paying off. The impact of new technology was less than 50% of what management had expected. Employee productivity remained low. Workforce scheduling wasn’t aligned with market demand. The goals of reducing costs and improving customer service appeared out of reach despite the effort and investment already made. Ultimately, the operations appeared unable to deliver the excellence in execution required to secure their share of the market.

Approach | We uncovered key facts and fresh insights by analyzing the entire work process at a major distribution facility. Most surprisingly, the team concluded that management’s plans to implement a group incentive program should be shelved because it would not address the fundamental issue of high labor costs. Instead, management followed our recommendations for a three-pronged approach: the workforce was right-sized by providing early retirement packages and leveraging the availability of part-time employees on flexible work schedules; workstation processes were redesigned to improve efficiency and matched with weekly and monthly workload fluctuations; setting new performance accountability measures at the individual and team levels improved throughput.

Results

Reducing the fulltime work force by 27% yielded significant savings.

A 300% return on investment in the Axiom recommendations, including reduced cost per SKU, increased throughput and measurably higher employee productivity.

Avoided incurring the costs of implementing a misguided group incentive program.